UPDATE 3-ConAgra raises FY profit outlook, shares touch 13-year high

Thu Dec 20, 2012 12:23pm EST

* Second-quarter revenue $3.74 bln vs est $3.69 bln

* Adj earnings from continuing ops $0.57/shr vs est $0.55/shr

* Sees full year EPS at least $2.06/share vs est $2.07/share

* Expects full year net sales to grow 7-8 pct

* Shares touch 13-year high

By Siddharth Cavale

Dec 20 (Reuters) - ConAgra Foods Inc raised its full-year earnings forecast on expectations that recent acquisitions and increased marketing will boost sales, sending shares of the maker of Chef Boyardee pastas and Hunt's ketchup to a 13-year high.

ConAgra's shares rose as much as 3 percent to $30.80, before easing back to $30.29, on the New York Stock Exchange on Thursday morning.

ConAgra now expects per-share earnings of at least $2.06 for the year ending May 13, compared to its earlier forecast of $2.03 to $2.06 and analysts' average estimate of $2.07.

The company last month announced the $5 billion acquisition of Ralcorp Holdings Inc that will make it the top U.S. producer of private-label foods that stores brand as their own. .

ConAgra, which sells brands such as Act II, Hebrew National, Marie Callender's and Orville Redenbacher's in its consumer foods business, said its full-year earnings forecast does not include any benefit from its largest acquisition this year, the Ralcorp buy.

An updated forecast will be issued after the deal closes in the first quarter of 2013, it added.

"The Ralcorp transaction will clearly be a game changer in terms of our private label footprint," Chief Executive Gary Rodkin said on a post-earnings conference call with analysts.

ConAgra has been beefing up its presence in the private-label foods business, which often grows faster than the branded food market when lingering unemployment squeezes consumer spending.

It also bought breakfast sandwich and sausage maker Odom's Tennessee Pride and Kangaroo Brands' pita chip business this year. It also struck a deal to buy Unilever Plc's North American frozen meal business for $265 million.

These deals have broadened ConAgra's exposure to faster-growing retailers with robust private-label brands, like Whole Foods Market Inc and Costco Wholesale Corp .

"(We are) making a business model for private label that we expect will consistently post strong top line and bottom line growth over time," Rodkin said on the call.

The company said it expects net sales to grow 7 to 8 percent in fiscal 2013, implying revenue between $14.19 billion and $14.32 billion, according to Reuters calculations. Analysts were looking for $14.43 billion, according to Thomson Reuters I/B/E/S.

The company has stepped up marketing initiatives in a bid to strengthen its brand and expects this to improve sales volumes in the consumer foods business this year.

"Sales growth for the consumer segment is expected to be in the high single digits in fiscal 2013," John Gehring, chief financial officer, said on the call.

ConAgra's net profit rose to $211.6 million, or 51 cents per share, in the quarter ended Nov. 25, from $180.2 million, or 43 cents per share, a year earlier.

Excluding items, the company earned 57 cents per share from continuing operations, topping Wall Street expectations by 2 cents.

"The results reflect the number of deals they have done over the past year," Morningstar analyst Erin Lash told Reuters.

Sales rose 9 percent to $3.74 billion. Sales in its consumer foods business rose 11 percent to contribute 64 percent to total revenue. Analysts on average had expected sales of $3.69 billion.

Sales in the commercial foods business rose 5 percent, helped by strong sales at is Lamb Weston potato business outside the United States. The company expects full-year growth in the segment to be about 3 percent.

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